Tuesday, May 10, 2011

IG of Commerce: NTIA Botched $50 Million Motorola Stimulus Award Review

Todd Zinser, Inspector General,
U.S. Department of Commerce 05/10/2011 San Francisco - The U.S. Department of Commerce badly botched its internal review of the controversial BayWEB $50.6 million wireless broadband stimulus grant to Motorola Solutions, Inc. (NYSE: MSI). So says the Inspector General of Commerce, Todd Zinser, in a 15-page report issued last Friday, May 6.

The report is the first promulgated by a federal inspector general about a specific project award under the $7.2 billion program of the Obama Administration.  

Zinser's report is sure to raise further questions about the management of the program on Capitol Hill, especially among its Republican critics. It is however Zinser's second and now pending report on BayWEB, to be issued sometime in the future, that will keep municipal and state officials in California up at night as the IG further probes allegations lodged against the project.

IG Investigation Triggered by Silicon Valley Governments
The effort by Zinser's Office of Inspector General (OIG) was triggered by a formal request for an investigation filed last November 1 by Dr. Jeff Smith, the County Executive of Santa Clara County, California. Smith, the chief administrative officer of the largest jurisdiction in Silicon Valley, wrote at the time "this investigation is warranted and necessary in order to ensure that public funds are administered in a transparent and fair manner at all levels of government."  

Smith, together with City of San Jose Mayor Chuck Reed, initially filed a complaint about the BayWEB project on September 8. 

'No Process in Place' at NTIA for Stimulus Award Reviews
IG Todd Zinser wrote that "No process for independent review of complaints" about
stimulus awards is in place at the National Telecommunications and Informa- tion Administration (NTIA). The agency manages the $4.7 billion portion of the program appropriated by Congress to the Commerce Department. 

Zinser found the lack of independent review capability continues to today, although the first formal complaint about the BayWEB public safety project was filed last September. At the time that filing was made, "NTIA did not have procedures in place to handle complaints and inquires about awards".  

More damning are the findings of Zinser that NTIA made repeated missteps when the serious allegations about BayWEB were raised.

NTIA, said Zinser, "did not perform sufficient research before it responded" on October 1 to the charges lodged by Reed and Smith. On that date, NTIA broadband stimulus director Anthony Wilhelm issued a letter to the officials which, according to the IG, stated "NTIA had no information that called into question the recipient's ability or intent to execute the project in accordance with the terms of the grant." 

Four days later this publication was first to report the the statement of NTIA chief Lawrence E. Strickling which defended the award, saying, "While we would take into consideration the result of any legitimate inquiries conducted by local jurisdictions that concern a grant, NTIA and the Department of Commerce has thoroughly vetted this project," said Strickling at the time.

NTIA repeatedly made errors, according to the OIG report, as it was forced by the Valley governments to continue its review of BayWEB into this year. Strickling again responded to San Jose and Santa Clara County with a terse letter of February 24 long on rhetoric, and short on substance. He concluded that missive saying, "It is vital all interested parties move forward with all dispatch to ensure that the citizens of the entire Bay Area benefit from this project."

IG to Issue Second BayWEB Report, Procurement Irregularities Continue
Zinser sums-up this exchange and the previous ones between the NTIA Administrator and the local governments by stating, "Overall we found that NTIA did not respond in a manner sufficient to resolve Santa Clara's and San Jose's requests for investigation of the BayWEB award."

NTIA's work to review BayWEB was however sufficient enough for Administrator Strickling to travel to meet with the project's lead sponsors the next week in Alameda County, irrespective of the ongoing federal probe.

At that meeting, to which the press was not invited, Mr. Strickling urged local govern- ments to move ahead to work with Motorola to negotiate a specialized Build Own Operate and Maintain (BOOM) document which exists outside the normal public procurement requirements of California law. 

OIG 11 024 I_BayWEB Final Report 5-6-11

The BayWEB Examination is our compendium of information on the project. We believe it is the most comprehensive such collection available. We have assembled links to all media coverage of the issue, to online documents secured by us from confidential and open sources, to documents secured by others and by this publication under federal and state public records filings, and to our own published reporting.

Note on awardee identification: The project grant was applied for by, and subsequently awarded to, the entity Motorola, Inc., formally traded as (NYSE: MOT). Motorola, Inc. was split into 2 new and separate companies, which both began trading on January 5, 2011.  The network infrastructure side of the business, all public safety equipment lines, and the network integration / management services divisions became Motorola Solutions, Inc. (NYSE: MSI). We have retroactively re-tagged our BayWEB stories with the MSI ticker symbol. 

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